Morgan McKinley City Bonus

City bonus culture declines with 14% drop in employees receiving bonuses for 2012/13

2012/13 Bonus Satisfaction Survey Highlights

Bonuses were paid to 68% of City professionals in 2012/13 compared to 82% in 2011/12

Only 36% received a pay rise in 2012/13, whilst in 2011/12 47% saw their salaries increase

Bonuses in 2012/13 were up to 30% of basic salary for 87% of respondents

Compared to the previous year, 22% got a bonus that was higher in 2012/13, whilst 41% received the same

The survey in 2012/13 showed 36% were satisfied with their bonus payment, compared to 42% in our survey of 2011/12

Only 2% cited bonus as the most important factor when changing jobs

If the European bonus cap is imposed, 83% of respondents would still not consider working outside of London.

Market challenges impact City reward and remuneration

In April 2013, Morgan McKinley carried out its 2012/13 Bonus Satisfaction Survey to find out views of London financial services professionals on their bonus payments and compensation in the City.

The survey results highlight that 14% fewer professionals received a bonus in the 2012/13 bonus round compared to 2011/12, with 68% stating they were rewarded with a bonus, down from 82%. Similarly, pay rises have become less common across the sector with 47% of respondents having received a salary increase in 2011/12, but only 36% could say the same for 2012/13.

Morgan McKinley’s November 12 Bonus Expectations Survey found that 27% of respondents hoped to receive a higher bonus payment for 2012/13 than a year ago, but in reality, only 22% received a higher bonus, while 41% received a similar amount to a year ago.

Less focus on bonuses in the City

Morgan McKinley’s November 12 Bonus Expectations Survey highlighted that less than two thirds expected to receive a bonus payment in 2012/13. In addition, 89% thought they would be likely to receive only up to 30% of their basic salary – an accurate assumption as 87% received up to 30% of their 2012/13 salary as a bonus.

When asked about their priorities in considering a new position, only 2% of respondents in the 2012/13 Bonus Satisfaction Survey said their bonus came first. This reinforces the shift in focus away from the discretionary element of reward within financial services. Salary was found to be more important for 47% of professionals surveyed, whilst 34% indicated that the entire compensation package on offer was their greatest consideration. For the remaining 17% of respondents other factors outside of remuneration were considered most important to them.

Overall, 36% of professionals surveyed in 2012/13 stated they were satisfied with their bonus. This is a drop compared to our Bonus Satisfaction Survey of May 2011/12 when 42% reported their bonus was in line with their own expectations for the year.

“Looking at our last three surveys on bonuses, there are clear trends emerging across the sector. Firstly, there is a decline in the number of professionals receiving increased levels of bonus year-on-year. In addition, it seems from these results and also from our regular conversations with City professionals, there is a much greater acceptance of the downward pressure on cost management and the knock-on effect on overall reward. Many of these hiring managers will be in the position themselves of both being eligible for a share of the bonus pot and also having to make decisions about rewarding their own teams. It’s no surprise that after a few years of challenges facing their department or organisation they have become more accepting of this change in the market.

“Our survey shows that 83% of respondents actually confirmed they would stay in London despite the introduction of a European bonus cap - a positive sign for the sector. However, the main reason for this lack of concern around the bonus cap is the fact that the opinions in our survey represent non-revenue generating City employees. The vast majority of these individuals are unlikely to be in line for receiving 100% of their salary as a bonus and therefore will be unaffected by these new regulations.

“The underlying theme from all of this research is the culture change across the City which was synonymous for a long time with high rewards. Those receiving bonuses are now fewer in numbers, the amounts being paid out are dropping and individuals are less satisfied. We are finding professionals now coming to us to discuss their different motivations when considering opportunities for career development.”